M&A activity declined in the first quarter

Remember when we said M&A was gonna be hot this year? Well, so far it’s been “more lukewarm,” KPMG experts said of the first quarter of dealmaking, in a new report.

M&A activity through March 10 totaled $376 billion in value, putting the first quarter (well, most of it) at a 7% decline from Q4 2024 and making it the lowest quarter since Q3 2023, which came in at $349 billion, according to the Big Four accounting firm.

“The excitement and positive momentum observed in the M&A market at the start of the year has morphed into something more lukewarm,” as some firms held off on deals due to tariff uncertainty, Carole Streicher, head of deal advisory and strategy at KPMG US, said in the report. “However, there is still optimism that this year will be better than last, as there continues to be pent up demand for deals, with companies still looking to divest slow-growing assets and make acquisitions that will promote growth accretive to their bottom line.”

PE and IPOs, oh my. US private equity deals were down by an even greater rate. According to the report, Q1 PE acquisitions totaled $145 billion, a decrease of 19% from the last three months of 2024. It was also “the slowest quarter” for PE deals since Q1 last year, KPMG added.

It was a mixed bag for companies going public. There were 59 IPOs in Q1, down from 76 in Q4. US-listed IPOs raised $9.2 billion in the quarter, an increase of 7% from Q4, “but still far below the high of $133 [billion] seen in Q1 2021.”

Again, KPMG pointed to tariffs as a culprit.

“The year started well for the IPO market, but we saw a significant drop in activity in March as the impact of the tariffs and the market correction closed the IPO window for many,” Shari Mager, US capital markets readiness leader at KPMG, said. “We are still optimistic for the IPO market for the rest of the year, as we know there is a full pipeline of companies wanting to go public. We’ll need to see some more clarity over the tariffs and some calm in the markets for another IPO window to open up before the summer.”

Experts who recently spoke with CFO Brew also cited economic uncertainty and minimal movement on interest rates as other potential headwinds to dealmaking.